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Technology Stocks : Nortel Networks (NT)
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To: Kenneth E. Phillipps who wrote (9668)2/15/2001 2:34:40 PM
From: telecomguy  Read Replies (2) of 14638
 
Nettles said "And for fiscal 2002, the company says it expects revenues to
grow in a range from 45 to 65 percent above 2001 levels, versus previous
expectations of 35 to 65 percent."

Right now Ciena is on a run rate of 1.5 billion dollars in annual revenue versus NT's run rate of $40 billion for 2001.

Nettles says he is going to grow the business 45 to 65 so let's take the upside and assume that Ciena's numbers will come in around 2.5 billion in 2002.

Nortel said it can continue to grow by 35% for the next 3 to 5 years meaning it's projected revenue for 2002 will come in around $54 billion.

Seems to me NT is hopelessly undervalued against Ciena when you consider that from a base revenue of $1.5 billion, Ciena should be growing 3 to 5 times FASTER on a PERCENTAGE annual basis relative to NT.

To me, growing 35% a year when you are starting with a revenue of $40 is 100 times more difficult versus 65% a year when you are starting with $1.5 billion. All this tells me is that NT is still winning market share and getting lion's share of the optical market -- assuming they continue to grow by 35% a year.

What is a real joke is the fact that CIENA is now trading at around 350 times earnings while NT trades at around 40 times earnings.......

How the market figures that Ciena is almost 10 times more valuable per dollar of profit versus NT is beyond me. Seems that the market believes Ciena is going to exceed the mgmt forecast and that NT is going to underperform against their own forecast.
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